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Ethanol and the Price of Food

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In the Huffington Post on November 11th, Dave Vander Griend took aim at a coalition of food companies opposing the federal mandate for biofuels production. For months, these companies have felt the same pinch consumers in America and across the globe have felt as food prices have spiked, spurred by the US's misguided energy policy.

At the Environmental Working Group (EWG), we don't agree with some of these companies on their environmental practices. We do agree, however, that our country's rush to ethanol contributed to a dramatic rise in grain and food costs at home and abroad, including, disturbingly, in developing nations where hunger is a perennial problem. The law of supply and demand is working just the way we'd expect: when you use over 25 percent of the U.S. corn crop to produce fuel, you reduce the global food supply and push grain prices skyward. The International Food Policy Research Institute (IFPRI), the Organization for Economic Cooperation and Development (OECD), the UN, the World Bank, the International Monetary Fund (IMF) and Oxfam agree.

Mr. Vander Griend's main complaint appears to be that while the price of corn has dropped in recent months, the cost of food has not. This should not come as a surprise. When you reduce the cost of corn or any other feed grain, it takes months for the market to adjust and to see savings reflected at the cash register.

Then there's the impact America's misguided ethanol policy has on the environment.

In Iowa alone, the 7.6 million metric tons of greenhouse gases emitted by ethanol plants each year are equivalent to emissions from almost 1.4 million cars, according to the Iowa Department of Natural Resources. The rush to increase corn production for ethanol has increased agriculture-related toxic run-off in the Mississippi River Basin, and that has swollen the Gulf of Mexico's "Dead Zone" to record levels. Precious wildlife habitat is being plowed under as farmers plant more fuel crops to meet the federal mandate.

Yet even if the entire 2008 corn harvest were channeled into ethanol production, we would displace only 15 percent of the gasoline we use each year.

Mr. Vander Griend is right about one thing: these are tough economic times -- for the consumer and for the taxpayer hoping to see the government move more aggressively to solve our energy and climate change challenges. With mounting evidence supporting the conclusion that ethanol does more to hurt the environment than to help it, are billions of dollars in subsidies currently being lavished on the ethanol industry worth the money?

That question becomes even more pressing when you consider three out of every four dollars the US government spends to support renewable energy producers (including wind, solar, and geothermal) goes to ethanol.

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